Large industrial and commercial owners will always be business people first. They want the best value for the best price. More and more, however, the largest owners are coming to understand some of the major problems facing the construction industry in the wake of a booming market, worker shortages and volatile materials prices.
Many owners now are showing more flexibility in working with the industry to address these problems.
As part of its overview of owners, ENR once again is presenting its Top 425 Owners list (see p. 16). This list ranks publicly held companies based on the 2006 construction-in-progress figures they supplied to the U.S. Securities and Exchange Commission as compiled by Standard & Poor’s, a division of The McGraw-Hill Cos. However, many public companies do not separate out their construction spending from the rest of their capital expenditures, so ENR is once again publishing a ranking of 200 publicly held companies ranked on their overall capital expenditures.
Feeling the Pinch
The big issue on the minds of most owners is labor shortages, both in the trades and in management. Many owners already are feeling the pinch. “Our members are seeing more and more courtesy bids by contractors or contractors simply not bidding because they are working at capacity,” says Gregory L. Sizemore, executive vice president of the Construction Users Roundtable, Cincinnati. Much of this is simply a shortage of project managers and superintendents, he says. “We have to do a better job of attracting people into construction and engineering programs at colleges,” says Ricardo Aparicio, contract manager and senior counsel of GE’s corporate properties and CURT’s president.
The industry continues to have problems recruiting because of a bad public image. “Mothers don’t want to send their children into construction because of the three ‘D’s: They believe it’s dirty, dangerous and a dead-end job,” says Bill Brubaker, director of facilities engineering at the Smithsonian Institution. “There’s not much we can do about the dirt, but if you look at the statistics, construction in major markets probably has a lower injury and illness rate than office work.” He also points out that labor shortages have elevated wage levels around the country. “It’s no longer a struggle for a craft worker to support a family of four hardly a dead end.”
However, some regions are beginning to make progress in recruiting into the trades. At CURT’s 2007 National Construction Owners Conference in Naples, Fla., Nov. 6-7, six organizations were recognized for implementing effective construction recruitment and training programs. All six were from the Southeast and Gulf Coast. “In the wake of Hurricane Katrina, the need for construction workers to repair and rebuild became acute,” says Aparicio. “The region was forced to recognize the crisis and reacted sooner.”
Owners also point out that there is only so much they can do. “We may write the checks, but we are not hiring the boilermakers or the pipefitters,” says David McKinney, general manager for construction projects at Atlanta-based Southern Co. But the company is working with industry groups, workforce investment boards and state governments to increase the supply of skilled craft professionals, he says.
"We may write the checks, but we are not hiring the boilermakers or the pipefitters. "
—DAVID MCKINNEY, GENERAL MANAGER, CONSTRUCTION PROJECTS, THE SOUTHERN CO
McKinney says that Southern Co. has taken operational steps to address workforce shortages. For example, when possible, the company plans its plant outages to coincide with environmental-controls construction projects in an effort to optimize the skilled craft labor on its plant sites. “In this way, we avoid having too many skilled craft workers at a particular location at any one time, which often creates high turnover, as well as quality and safety issues,” he says.
One union speaker at the CURT conference said unions in the trades are refocusing their efforts on recruiting. “The trades got absorbed in their own issues in the past and ignored their customers,” confessed Edwin D. Hill, international president of the International Brotherhood of Electrical Workers. But they have “repented,” he says, and the attitude adjustment has borne fruit, as the union’s growing market share in Florida shows. In 2005 it was in the low single digits, growing to 20% today, he said. IBEW also is targeting Georgia, the Carolinas and Alabama, with their many immigrant workers.
This workforce shortage has ratcheted up owner demands for productivity through alternative solutions. The Construction Industry Institute, a construction research group at the University of Texas, Austin, has several continuing and new programs that are researching construction productivity. “Having the right people, equipment and materials at the right place at the right time could greatly enhance productivity,” says Wayne Crew, CII’s executive director. He says digital modeling has the potential for meeting this goal. CII is studying the best ways to leverage technology to enhance productivity, Crew says.
Interest in modularization also is increasing. “Modularization allows contractors to work away from the project site where the work is safer, more productive and in a more controlled environment,” says Crew. CII is also taking...